Commentary Local

Alarming drop in tourist arrivals spell more trouble for the economy

aaaaaatourists

TheMole
Written by TheMole

October 16, 2018

By Abdul Rahmat Omar

CHINESE-language newspaper Sin Chew recently reported on the diminishing number of tourist arrivals from China.

The article quoted travel operators that the local tourist industry has been suffering since the 14th general election, while the appointed tourism minister has failed to introduce new strategies to stimulate the industry and lure foreign tourists.

According to international media analysis, there is a strong correlation between China’s diplomatic relations and the number of tourists in a particular country.

For China, this could be attributed to the cancellation of projects aligned to its Belt and Road Initiatives (BRI) by the Malaysian Government amounting to more than US$20 billion.  

Malaysia’s decision to send 11 Uighur detainees to Turkey instead of China as requested, could spell more trouble for the nation.

The most Malaysia should have done was to send the 11 back to Thailand where they were initially arrested.

A quick look at tourism statistics reveals that year-on-year tourist arrivals have dropped in Q2 2018 compared to the same corresponding period in 2017.  

In Q2 2017, arrivals into Malaysia by nationals of Singapore, Indonesia, China and Thailand were at 3.09 million, 0.7 million, 0.53 million and 0.46 million respectively.  

In Q2 2018, they were 0.74 million, 0.25 million, 0.24 million and 0.18 million respectively.

There was also a stark difference in arrivals between Q1 2018 and Q2 2018 itself.  In Q1 2018, the arrivals of nationals from the above-mention countries were at 2.67 million, 0.79 million, 0.77 million and 0.47 million respectively.

As a comparison, arrivals into Singapore of Malaysian nationals in Q2 2017 was 287,661, Indonesian nationals at 749,753, Chinese nationals at 702,614, and Thais at 140,201.  

In Q2 2018 it was 302,638 for Malaysians, 795,777 for Indonesians, 798,032 for Chinese, and 171,479 for Thais. Unlike Malaysia, Singapore saw an increase in the number of tourists from these four countries.

Datuk Keith Li, who is president of the China Entrepreneurs Association in Malaysia, said that arrivals from mainland China to Malaysia dropped by an estimated 30 percent to 35 percent during their National Day break compared to last year’s holiday period.

His views were shared by Mint Leong, deputy president of the Malaysian Inbound Tourism Association.

“I estimated that there was a fall of 30 percent to 35 percent in Chinese tourists last week. This is quite a serious drop, given that there was an increase of outbound tourists from China,” said Leong.  

Even Nanyang Online reported that Raub’s Musang King durian failed to earn Chinese money during the golden week due to the drop in Chinese tourists.

Prime Minister Tun Dr Mahathir Mohamad has denied that the cancellations or reviews of various China-backed projects was behind the decline in tourists’ arrivals from China.

Instead, he said, the drop in Chinese tourists had not only affected Malaysia but was also experienced by other countries.  

We have no way of checking this as the latest statistics from Singapore show only the results as at end of August 2018. However, as shown above, arrivals into Malaysia of tourists not just from China but also from three other favourite countries, are seeing a decline as a whole.

Also, most alarming is the net outflow of foreign investments from the local bourse.  More than RM9.7 billion in term of foreign investments have been pulled out, with a staggering RM1.05 billion of foreign funds pulled out from local equities last week alone.  

This accounts for 94.2 percent of the net inflow of foreign investments received in 2017 which was RM10.3 billion.

With the three-month tax holiday between May 9 and to Aug 31, plus the decision to give a blanket subsidy for RON95 and diesel, coupled with the decline in exports, especially that of palm oil and the need to maintain the Ringgit at a certain level versus the Greenback, I can only imagine that our coffers are being bled dry with not much revenue to rely on.

The government’s answer to that would be the introduction of new taxes which will only decrease private final consumption expenditure.  

With people saving, there will be lesser money in the circulation, which in turn means lesser money to fund short-term consumption, which is an important component of the Gross Domestic Product.

That will in turn lead to lesser jobs being created, lesser taxes collected, lesser revenue for the country.  The economy will then contract. You don’t have to be an economist to know that.

Now that tourism will no longer provide 14.9 percent of the annual revenue, plus the declines in agriculture, mining and quarry and the construction sectors, it is of no wonder that there is a big chance of real trouble heading our way; and I believe it is just around the corner now.

 

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TheMole

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